Does anyone know the reason behind the sudden Volex (LON:VLX) price drop? I don't see any bad news to account for it.
Many Thanks.
This was discussed yesterday SCVR, it maybe to a belief that customers are destocking as other companies are reporting.
Stocks go down.
There doesn't need to be a reason...but there can be. Uncertainty of investing.
7% (?) -> I'd suggest (I'm not trying to be rude or patronising tbc) that if it makes you anxious then you may have too much emotional investment in the stock...meaning maybe its too big in your portfolio or you've not done as much work on it as should have?
Or he's genuinely just curious why a stock he is aware of underwent an unusually large 1-day change - does not have to mean he's emotionally attached, over-leveraged, all-in or anything else !
Alright alright…fair enough…I’m allowed to say it tho and you can disagree….or are you calling me out for more…like the fashionable acquisition of ‘bullying’? Otherwise, i don’t see your point in beefing me.
IMO a 7% move in a relatively small cap and illiquid stock is not a big deal. Always disconcerting when it happens for sure. I’m doing a service for anyone that has unrealistic expectations on what stocks do.
I have been a Volex seller because of repeated reports on the slowdown in electric car sales. Of course it is not Volex’s only business but it has been one of the areas that has given it it “sizzle” in the last few years. In the same way that the sizzle helped drive it up I am inclined to think that any report of slowdown will disproportionately drive it down. So I am out until the outlook is clearer.
Hi Callmetom,
I believe the reason why Volex (LON:VLX) has recently fallen is because sellers are causing the price to fall down to its Support Line at 275p (black horizontal line). If you look at the chart below, the price is around 289p, so this would suggest the price has a little bit further to fall. If you look at the share price it found support at 275p twice last summer and twice in the autumn. Also, looking at the Stochastic it is telling me Volex is oversold because it is around the 20 mark. I bought Volex about 6 years ago because I see it as a high quality company with a long runway and I still hold today. My view is that once the share hits its Support line buyers will return and the SP will bounce back up. As Mojo has pointed out you can expect sudden movements in the price of small caps. Anything under 5% in my mind is just noise, 7% is not too extreme.
David.
And…. if 275p doesn’t hold my limit order for the ‘gap fill’ trade at 215 ish is back in play!
Hi Snowbum,
If 275p Support Line doesn't hold then the next Support Line is 223p (black horizontal line) which the shares hit 4 times during 2022. Not too far from your 'gap fill' trade at 215p-ish.
David.
All excellent technical points…plus the fundamental view re slowdown in EV (not a Volex expert and didn’t think it would impact heavily)
I’m not a Volex fan (and I’m just wrong but can only see my own thing). As it falls a bit I guess one needs to decide whether you are a trader or fundamental…both can work if done well…not being clear what you are can get you in trouble tho
The current support for Volex is both the 50WMA and 200WMA. Combined with the horizontal price support it will take bad news (or a motivated seller) to break below this level. We can see that Volex bounced off the 200WMA several times before and faked down below this once before a very strong rise in price.
Volex (LON:VLX) used to be my largest holding but I lost faith and halved my holding at 312p. I am undecided if this is now a buying opportunity (probably). However, I used the cash to buy ME International (LON:MEGP) which was a good move and I have stronger conviction in the near term.
It’s notable that Volex (LON:VLX) didn’t bounce strongly off the 200WMA so the market isn’t sure either.
Ive just noticed that Investing.com says there is an earnings release on 28th Feb. So that’s the gamble. If it’s good we get a strong bounce (data centres are booming).
Looking at the BB’s we can see that the price is right at the bottom of the weekly, daily and hourly BB’s which leads me to believe the price is more likely to rise than drop.
On a negative front. If the earnings are bad and the price drops below 271p then we have something looking like a double top with a price target of 200p. So my stop loss is set for a close below this level.
In summary I’m probably going to add Volex (LON:VLX) in my SIPP which is longer term (and could cope with a small loss). But hold in my ISA which already has enough exposure to Volex (LON:VLX) and little spare cash.
Volex (LON:VLX) was one of the biggest holdings in Downing Strategic Micro-Cap Investment Trust (LON:DSM) which is being wound down. So there is a forced big seller in the market. That is probably the simplest explanation. Journeo (LON:JNEO) is another being affected imo.
